2019 (3) TMI 100 – CESTAT HYDERABAD – TMI – CENVAT Credit – common inputs used in dutiable as well as exempt goods – iron ores – reversal of 6% of iron ores in terms of Rule 6(3A) of CCR 2004 – whether the iron ore fines are to be treated as excisable goods manufactured by the appellant which are exempted by virtue of exemption notification and correspondingly whether an amount needs to be reversed under Rule 6(3) of CCR 2004? – Held that:- W.E.F. 01.03.2015, the reversal under Rule 6(1) of CCR is necessary even in respect of non excisable goods which are cleared for consideration from the factory – post 01.03.2015, even for iron ore fines, reversal of CENVAT Credit is necessary.
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As the matter is a decided matter on merits, there is no need to go into the question of limitation.
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Appeal allowed – decided in favor of appellant. – APPEAL No. E/30725/2018 – A/30206/2019 – Dated:- 13-2-2019 – Mr. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Ms. S. Vishnu Priya, Advocate for the Ap
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pted and the CENVAT Credit is availed on inputs used in manufacture of their final product as well as iron ore fines, they are required to reverse 6% of the value of the iron ore fines in terms of Rule 6(3A) of CCR 2004. 2. After following due process, the Ld. Lower authority confirmed the demand of ₹ 46,87,791/- in respect of the iron ore fines which were cleared by the appellant during the period September 2011 to March 2015 under Rule 6(3) of CCR 2004 read with Rule 14 and Section 11A(5) of Central Excise Act, 1944. He also confirmed a demand of interest on the aforesaid amount under section 11 A and impose a penalty under Section 11 AC of Central Excise Act 1944 read with Rule 15(2) of CCR 2004. Aggrieved, the appellant appealed to the first appellate authority who upheld the Order-in-Original in toto and rejected the appeal. Hence this appeal. 3. Ld. Counsel for the appellant submits that the two tests which must be passed before a product gets charged to central excise duty
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ted and dutiable products. Since they are not manufacturing Iron Ore Fines, they cannot be considered as exempted excisable products. She relies on the case of Maa Mangla Ispat Pvt. Ltd. [2013(293)E.L.T. 380 (Tri.-Del.)], Seleno Steels Limited [2013(287)E.L.T. 93 (Tri.-Del.)], Nav Durga Fuels Pvt. [2016(340)ELT 526 (Tri.-Del.)] and Aarti Sponge & Power Limited [2017(350)E.L.T. 268 (Tri.-Del.)] and asserts that in all these cases on the identical issue, it has been held that iron ore fines which emerges during the process of manufacture of sponge iron from iron ore are not manufactured and no CENVAT credit on the common inputs and input services used needs to be reversed under Rule 6(3) of CCR 2004 with respect to the iron ore fine sold by such manufacture. She asserts that their case is identical. She also contests the demand on the question of limitation and draws the attention of the Bench to the para No. 13 of the show cause notice which shows that the only basis for issuing the
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ence is clarificatory in nature and has to be applied to cases prior to issue of this notification as well. He further argues that the entire manufacturing process of iron ore begins with breaking of iron ore into smaller parts and feeding them into blast furnace. This process of breaking iron ore lumps itself is integral part of manufacturing process and it cannot be treated as a process separate from the manufacture. Therefore, iron ore fine which emerges during the process of breaking of iron ore lumps into smaller parts are to be considered as emerging out of manufacture. Therefore, iron ore fines are indeed manufactured by the appellant, as a joint product along with pig iron. The iron ore fines have also been specifically mentioned in the Central Excise Tariff and therefore should be considered s excisable goods. But for the exemption notification, they would have been liable to pay excise duty. Because of the exemption notification, they were exempted and therefore the appellant
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by virtue of exemption notification. It is the case of the appellant that they are not manufacturing iron ore fines at all. I find that in identical matters coordinate the Benches of Tribunal have taken a view in the case of Maa Mangla Ispat Pvt. Ltd. (Supra), Nav Durga Fuels Pvt. Ltd. (supra), Soleno Steels Ltd. (supra) and Aarti Sponge & Power Limited (supra). It was felt in all these cases that reversal of CENVAT Credit under Rule 6(3) of CCR 2004 is not necessary with respect to iron ore fine which emerges during the process of iron ore. I respectfully follow the ratios of these decisions. I have also considered the contention of Ld. DR that w.e.f. 01.03.2015, the reversal under Rule 6(1) of CCR is necessary even in respect of non excisable goods which are cleared for consideration from the factory. I find it so. I, however, do not agree with his contention that his explanation is deemed to have retrospective effect in the absence of any specific intention on the aforesaid noti
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